Resorts World Catskills, New York’s fourth commercial casino opened on February 9, 2018. It cost $1.2 billion to build and has 2100 slot machines, one hundred and thirty table games and one hundred hotel rooms. New York is a rather crowded gambling market place; success and profit will not come easily for Resorts. In addition to the four commercial casinos, there are ten Indian casinos, five Class II and five Class III. Currently, tribal casinos are estimated to generate approximately $1 billion annually in gaming revenue. There are nine race tracks with 19,000 video lottery terminals. The revenue from the VLTs was $2 billion in 2017. Added to those forms of gaming, there is a state lottery. The lottery reported nearly $10 billion in 2017. Before the commercial casinos arrived on the scene, New Yorkers were already spending $13 billion dollars a year gambling. That does not leave much left over for Resorts and the other three casinos. In addition to the in state gambling options, there are casinos, lotteries, racinos, Indian casinos and charitable bingo halls throughout the Northeast region.
The press in New York has been relentless in pointing out that the casino plan touted by Governor Andrew Cuomo and approved by the voters was far from meeting expectations. As with all good government plans, when Cuomo was on the road selling his plan to expand gambling in New York he said the casinos would create jobs, lure tourists and allow the state to recapture some of the gambling revenue now flowing to nearby states with casinos. “We literally hemorrhage people from the borders who go to casinos,” Governor Cuomo told reporters. “I think it will keep the money in this state, and I think it’s a major economic development vehicle for the Hudson Valley especially and for upstate New York.”
The press has not weighed in on the impact the casinos have had on the hemorrhaging, but it was quick to tell the governor and the voters that the casinos were not producing the revenue, jobs or associated development that had been promised. This story of failure got a new chapter in the last week of March. Del Lago casino in Tyre is in trouble. It opened on February 1, 2017. It cost $440 million to build and has approximately 2000 slot machines, 100 table games, a poker room, 200 hotel rooms and a bunch of restaurants. When the ownership group of Wilmorite and Peninsula Pacific were making their pitch for a casino license, they estimated the casino would generate $263 million in gaming revenue a year. The casino pays 37 percent on slot revenue and 10 percent on table game win. Given that the slots are currently generating about 70 percent of the revenue, the blended rate is just short of 30 percent. Del Lago could be expected to pay $80million a year in gaming taxes.
However, in the first year the casino generated just $158 million in revenue; the tax is thus $30 million less than expectations. But the state coffers and the press are not the only ones disappointed. The owners are not getting what they expected either and have asked the state for a break. What kind of a break? The casino management would like to reduce their taxes by 10 percent so they can put that money into to marketing and promotions. It claims conditions have changed since they started to build the property and one of the things that has changed is the Indian casino marketing. According to del Lago management, the Indian casinos have become more aggressive in their marketing, stealing away customers who otherwise would have been happily pushing buttons on slot machines at del Lago Resort Casino. One has to wonder if Wilmorite and Peninsula spend any time studying the market before jumping in with both feet and $400 million.
True, since the casino plan was approved by the voters in 2013, the tribes in New York have been upping their game. They have spent millions on upgrading and improving their casinos and even added a couple of new, smaller casinos meant to solidify the borders between the Indian casinos and those the state was licensing. The tribes in New York are very experienced at dealing with the European invaders; the five civilized tribes, as they have been known for several hundred years, have existed in New York for several thousand years. They are not likely to throw up their collective hands and say, go ahead take our customers – not to the governor, the voters or the new casinos. Instead one can expect the tribal casinos in New York to continue to do everything within their power to protect their customer base.
It will be a battle, but only one of many that are being fought across the region. The long expansion of gaming is reaching its final stage. Each new casino authorized and built in the region will enter into a market just as crowded as that of del Lago. The stakeholders are going to have to dial down their expectations and then get used to even those being unfulfilled. It is becoming increasing difficult to meet the goals of either the government or the operators in this crowded market place. The upcoming casinos in Boston, Springfield, Pennsylvania and Atlantic City will all discover the same basic fact that there are too many casinos and something has to give. The casino quandary does not belong exclusively to Governor Andrew Cuomo, it is going to be shared by governors in Pennsylvania, Massachusetts, New Jersey and other states.
